If the Public Has Rational Expectations, an Attempt to Increase

Multiple Choice

If the public has rational expectations, an attempt to increase aggregate demand to stimulate the economy will:

A) be less inflationary in the short run than if the public alters their expectations slowly in response to changes in government policy.
B) be more effective than if the public alters their expectations slowly in response to changes in government policy.
C) be ineffective if the shift in aggregate demand is predictable.
D) be all of the above.